The strong show of support for Seshasayee came a day after Narayana Murthy raised concerns over what he termed as declining governance standards.ET Bureau | Updated: February 11, 2017, 08:23 IST

Members of the Infosys board closed ranks behind non-executive chairman R Seshasayee in a strong show of support, a day after co-founder NR Narayana Murthy raised concerns over what he termed as declining governance standards at the country’s second-largest software company.

“Seshasayee has the complete backing of the board and the management, not to mention their full confidence in his leadership,” said a highly placed executive at the company who did not want to be identified.

Seshasayee, in particular, has come under strong fire from the promoters and ex-Infosys executives. Former Infosys CFO V Balakrishnan said Seshasayee should take responsibility for ‘governance lapses’ and step down.

That is unlikely to happen, according to senior Infosys executives and board members. “He (Seshasayee) is a corporate veteran who has seen worse and he plans to stay the course,” said the executive mentioned above, who pointed out that the management and the current board had the backing of institutional investors.

“The stock of Infosys did go up today, didn’t it?” he said. “Doesn’t that show the absolute confidence that institutional shareholders have in Seshasayee and the management? They really aren’t bogged down by what’s happening,” added the person. The scrip ended the day 2.22% up at Rs 967 on NSE.

In an interview with ET on Thursday, Murthy had called for the induction of “good people” like NYU Stern professor Marti Subrahmanyam as co-chairman of the board, the replacement of Jeffrey Lehman as head of an important board committee and appointment of unnamed former Infosys employees “schooled” in the company’s values as directors.

In response to a question from ET on whether Seshasayee had the backing of the board, independent director Kiran Mazumdar-Shaw said, “Yes. We are a very cohesive Board.”

“Everybody is welcome to suggest various things. The board will evaluate and take a view,” said Mazumdar-Shaw, who is the founder of biotechnology major Biocon. “Just because a suggestion comes from the promoter group, there is no obligation for us to do things that way… We are not going to simply do things because they (promoters) are asking us,” she said, adding that the board would seriously consider suggestions that were “right for the organisation”.

The ongoing tussle at the very top of Infosys could not have come at a worse time for the $150-billion Indian outsourcing industry. Indian IT companies face slowing growth, increased protectionism in their major markets and accelerating technology changes that threaten to undercut their breadand-butter services.

In a bid to deal with the fallout of the dispute, Infosys has appointed Cyril Amarchand Mangaldas to institutionalise a process for it to receive inputs from the promoters and other key stakeholders. That has not gone down well with some old Infosys hands.

“Why should they bring a law firm in the middle? It shows a lack of trust in your largest shareholders and founders,” TV Mohandas Pai, another former CFO of Infosys, told ET.

Some institutional shareholders are unhappy with the attempts made by Infosys’ founders to influence the company. OppenheimerFunds, which owns over $900 million of Infosys shares and controls about 2.7% of the company’s shareholding through various arms, asked the board to back CEO Vishal Sikka.

“Everybody is in a very emotional state of mind. We have to first calm down, and work amicably towards addressing the concerns the founders have raised,” said Mazumdar-Shaw.

“The concerns raised by Murthy and other promoters are all old issues, and they have been dealt with through a shareholder voting process. Shareholders overwhelmingly voted in favour. We have followed the due process and done nothing wrong,” she added.